Focus on particular sectors, including Manufacturing, ICT and Media, Energy, Healthcare and Pharmaceuticals, Cities and Transport, Creative industries and Design

20:15: Consider what needs to happen next
20:35: Planning around writing and other initiatives
20:45: Finish

Participants

The event was conducted under the Chatham House Rule and thus participants are not listed.

Documentation

This is a write-up of the introduction with the points from the discussions. Some are unresolved and to be discussed further at the next discussion.

Global developments

China and India are playing new roles, in export, but also in ambitious areas such as a transport and space. China is also moving to indigenous innovation. But the West is also putting up trade barriers, for instance around ICT in the context of security. In industry and business the idea of a Third Industrial Revolution has caught on, around new manufacturing techniques combined with ICT and new forms of financing. The focus of innovation has very much moved back to the physical, albeit network and IT enabled device, without as much concern about resources and the environment as would have been expressed a decade ago.

There has been much debate, mostly outside the UK about whether we are in a period of continued depression or of great possibilities, at the former argued by Tyler Cowen in his book ‘The Great Stagnation’ and the latter by Erik Brynjolfsson, Andrew McAfee in their book ‘The Second Machine Age: Work, Progress, and Prosperity in a Time of Brilliant Technologies’.

The corporate sphere

In the corporate sphere, companies are collecting data obsessively but, according to McKinsey, ‘60% is rubbish’. [#Johny: See my ‘Big Hats and Big Data’ post at practicaldatamigration.com. See Pandora acquisition by Experian. Compare to innovation created at BT in 70s and 80s that was stifled.] Labs and research are becoming more outward-facing, and companies are excited by open innovation, such as Tesco’s ‘T-Jam’, and the potential of open APIs, but they have yet to show results. To some extent they are vanity projects that distract from really understanding and digging into problem and challenges. [#Daniel: Corporates spending too much time burnishing reputation with startups.] Corporates’ focus on startups also represents a bent towards single-minded benefits, rather than future of the economy. As their reputation is so poor, corporates are increasily being taken over by PR. They also increasingly look to keep up with one another, as they are very scared.
We also see continued cash hoarding and financialisation, partly a result of activist investors and the impact of quarterly reporting, which is also inhibiting innovators (a view taken by economist Andrew Sentence). Risk management is still key to large companies. The decline of professional confidence of managers and corporate leaders continues – with the death of Steve Jobs highlighting its dominance – and in politics citizen engagement, though Prime Minister Cameron’s Big Society project was quietly dropped. And there has been an increased focus on executive pay – and affluence generally – as the most tangible ‘critique’ of modern capitalism. In the UK at least, the American culture of failure, and meritocratic acceptance of outsiders, has still not fully caught on.

Innovation and economic approaches

Hostility to traditional innovation approaches continues, with a focus on co-creation, open innovation, rapid ‘action research’, crowdsourcing and crowdfunding (as well as other new equity models), ‘frugal’ innovation, X-Prizes (such as the Longitude Prize and the Google Lunar Prize), the use of (big) data for insights, and realtime data for product evaluation. There is also a greater reliance on, and belief in, algorithms and they are unceasingly seen as being objective and impartial, even though they are human creations (see Michael Lewis’ book ‘Flash Boys’ on the impact of this in financial trading). However, management is now a more sympathetic audience for discussion of innovation, and it has risen people’s perspectives. Companies are also being more innovative with respect to digital technologies – for instance Barlcays with Pingit, River Island, and others – as they are ‘in a hole’ and lacking consumer trust.
Clustering is still in vogue, with Silicon Roundabout considered a success story, and London is now seen as a model for tech clustering. However the rise in rents anticipated by London Deputy Mayor for Business and Enterprise Kit Malthouse at the Centre for London launch of the 2012 A Tale of Tech City Report has come to pass and is leading to ‘de-clustering’ the cluster. In the areas of startups, the tendency to seek acquisition, particularly in the UK, is still a dominant feature – and many products are really features waiting to be added to existing products, or to have their teams, having shown their chop, being acquired.

The service-isation of industries has progressed – particularly around transport and accommodation – enabled by the Internet, and the resulting struggle of existing trade organisations and regulators to engage with the new behaviours. The sharing economy has also come to the fore, but there has been a recognition that in areas such as car sharing this will only constitute a small fraction of resource use while traditional models of transportation prevail. Gamification has waned as model for engaging with and creating data from customers, though the model has had some success in scientific research.
R&D and innovation has been reduced to and elided with IT (see Reaction Engines in aerospace), leaving the deficit in R&D unremarked on. There is also more intersectionality between disciplines. R&D has been further internationalised and outsourced, for instance with Pfizer and other pharma companies, and ‘big pharma’ is buying up innovative companies and showing little concern about the (10 year) horizon. Innovators such as James Dyson have talked about the need for a wartime mentality towards innovation.

The economy

On the economy discussion of cuts and austerity is still the main focus, as well as low inflation levels, which indicate a lack of appetite for long-term investment. Mark Carney’s appointment as governor of the Bank of England has not had the impact that was trumpeted, though he is aware of the ‘carbon bubble’ being created. While low interest rates and quantitate easing have been accepted, commentators such as the FT’s Martin Wolf have pushed back on allowing banks to print money and the danger of it facilitating the creation of ‘zombie businesses’ (a view expressed by economist Phil Mullan in spiked). [LibDem MP Lucy Cash has noted the economy is fragile, e.g.: sub-prime mortgage contagion leading to instability in the real world. And to an extent a more efficient economy will be more fragile.] There has been more recognition of productivity issues, and this has increased post Election, particularly in the media, but little inquiry into the specifics of productivity issues within industries, including healthcare, public services, and house building.

Society and politics

In society and politics the ideas of technological and neurological determinism have continued to ascend, leaving little room for human agency – though academic and writer Evgeny Morozov has critiqued the model of ‘solutionism’ as promoted by West Coast tech leaders. The concept of ‘nudging’ – originally promoted by Sunstein and Thaler – has been widely embraced, as has the role of design in this context and more widely around behaviour change (showing the lack of confidence in politics and other disciplines). The rise of the importance of the customer continues – along with a critique of consumer culture – but also a recognition that customers are becoming the ‘products’ in the domain of free online services and social media and a related concern about privacy and corporate abuse of insight. The Edward Snowden leaks have moved the focus of surveillance concern to the security services and the state, and a greater concern by citizens in how they use Internet services.

The precautionary principle and risk are still invoked – those less widely – especially around medical procedures, artificial intelligence, and commercial use of customer data. Expressing a desire to take control of their lives, the push for authentic and independent lifestyles continues to grow, in models of work and consumption – exemplified by Shoreditch culture – as does the focus on craft and making, particularly around the Maker and ‘Internet of Things’ movements. In these areas the UK is ahead of most countries.

There has been a tendency towards infantilisation, with rise of the selfie and the ‘selfie-stick’, and their associated self-regarding view of society. ‘Cocooning’ has also continued to flourish, particularly around ‘box set bingeing’ via online services such as Netflix and Amazon Prime Instant Video.

On a more positives note, there has been a revival of interest in space, particularly around the Space Shuttle Endeavour, Mars Curiosity Rover, and the Rosetta/Philae mission on the public side an, con the commercial side Felix Baumgartner’s sky dive, Space-X, and the Google Lunar XPRIZE.

Politics and policy

In policy areas such as transport price signalling has tended to prevail over signalling algorithms, and targets and incentives continue to substitute for effective methods of encouraging innovation. In their General Election manifestos there was only one reference to science or engineering in Labour’s, and four in the Conservatives, though focused around skills. There were fewer references to innovation than in last the 2010 manifestos.

The impact of the Scottish referendum has yet to be felt in innovation, but will tend to create more tension in deicion-making, around big infrastructure projects, and as a result of possible changes in the location of military and other government research. More generally, the legitimacy crisis of the establishment – driven by the MPs tax expenses and Leveson enquiry – has become more profound. There has been a continued deference to scientists – the ‘new scientism’ (as opposed to Cold War scientism) – who are seen as more objective and more optimistic, while politicians are viewed as self-interested pessimists and considered at best as managers.

The housing crisis is the area in which government failure is least accepted and has lead to public demonstrations and campaigns for more and better housing. Though emphasis is still on building on brownfield sites there has been some questioning of the policy of not building on the Green Belt, both in the media and among senior government politicians such as Nick Boles. More generally infrastructure, Crossrail is considered a success in terms of engineering, design and planning, while the HS2 rail project has been criticised for solving the wrong problem and being backward looking. While ‘London’ 2012 was considered a success from an architectural perspective, the legacy has been for developers, and it has allowed regeneration to be viewed as instrumental rather than a good in itself.

Academic Mariana Mazzucato has promoted the idea of The Entrepreneurial State, arguing that government funding of R&D has been key to modern innovations in ICT and beyond. She has also promoted the idea of ‘Mission-Oriented Finance’ through a conference and publication. However, the role of more authoritarian states such as China has also been noted in pushing through innovative developments. On the policy side, theBig Innovation Centre, founded by The Work Foundation’s Will Hutton, has promoted fresh thinking about innovation, and particularly the role of General Purpose Technologies in secular innovation. Even the labour organisation the TUC has engaged in innovation debate, though it’s focus has been more around opposition to austerity.

The environment and climate

Discussion of the environment and climate change have been more muted, particularly around the General Election. In part this is because the debate is no longer contentious, and the moral climate has changed and these views are now ’embodied’. There is no great vision for investment and there was little discussion during the Election, other than Greens leader Natalie Bennett focused on an ‘eat less’ policy. [#James: Go micro-ised [check], and people more skeptical.] Attitudes on these issues have become ‘a matter of manners’. Yet we don’t have the data history to know about human impact. There has also been an elision of weather and climate, and the ‘naturalising of everything’, leading to a diminution of ambition. On the more ambitious side, academic Carlota Perez has called or a green economy as a way forward.

The public sphere

In the public sphere the discussions of digital exclusion has been revived by Martha Lane-Fox’s DOT.EVERYONE project. While rhetoric about the digital divide is in bad faith, UK broadband is still poor, and four million UK citizens are effectively offline. The benefits of basic access to and ability to use ICT for every worker, for instance, are rarely addressed. Tools are becoming ‘democratised’ but, while positive in many respects, we have yet to see a flourishing of culture as a result of this. Coding and ICT skills are being pushed more than ever, with public (coding taught in schools, the Year of Code) and private initiatives (Raspberry Pi, Code Club, Kano, etc), partly after very public criticism of UK education by Google chief Eric Schmidt in 2011. There has been much promotion of STEM in education, not least in respect of the perceived skills shortage, and also of STE(A)M – including the arts – but much of it is instrumental rather than inspiring.

On the government side, the Technology Strategy Board (since renamed Innovate UK) was adopted from New Labour by the Coalition, which has been more focused on industrial policy than Labour (aside from Peter Mandleson’s intervention late in the Brown years), with Minister of State for Universities and Science David Willetts promoting the idea of Eight Great Technologies to pursue. Hostility to the notion of ‘picking winners’ mediated by the idea of picking domains (for instance for Catapult Centre activity). There has been more focus on the role of government in procurement, particularly with respect to SMEs, and the connection of academia to industry, though this has been criticised as instrumental and distorting the behaviour of universities. The impact of tuition fees on university admission has not been as great as expected, though there will likely be a longer term impact from students being treated more as customers. The value of tax credits for R&D has been acknowledged, as well as problems with the model, not least the high-handed behaviour of HRMC with respect to it. There has been little government leadership in particular domains, though graphene has been championed by Chancellor George Obsorne on a number of occasion. However, while innovation around it is taking place globally around graphene, there is little excited in government around these developments.

Democracy and innovation

There is key issue around the role of the state and democracy in innovation. The scale of the new Chinese ‘Silk Railway’ is impressive, but it was noted that coalitions find it hard to make decisions, and we need more Chinese-style leadership. However the US space race took place in a democracy. And democracy is better than all the alternatives, as Churchill argued, though at present we not getting the democratisation or the innovation politics.